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Economic History 101, Individual Vs. Government Initiative: The Great Leap Forward

The agricultural economy of the late 1950's largely resembled that of the Nationalists prior to Mao's ascension to power, characterized by peasant farmers tilling small plots on which they had some form of claim of ownership or tenancy, the latter of which dated from the time of China's last dynasty, the Qing line. All that changed in 1957 with the policy known as the Great Leap Forward, its major policy elements being the redirection of labor Read More »

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Was Joe Paterno Really That Generous?

Many of those defending Joe Paterno's legacy point to his involvement in and giving to many projects at the University. At the press conference of the Penn State University Board of Trustees on the release of the Freeh Report, Trustee Kenneth Frazier was quoted as saying, that the report found "inexcusable failures on the part of Joe Paterno and others to protect children. But I'd also say Joe Paterno did a lot of tremendous things in Read More »

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Ford and the Auto Bailout…

The visit of President Barack Obama to Detroit yesterday gave the Administration ample opportunity to crow about the Government led auto bailout of 2008. "If it was up to the Republican Party, Chrysler and General Motors would not have been here," UAW Secretary-Treasurer Dennis Williams told the crowd of thousands "If it wasn't for President Obama, we would not have the opportunity to once again build the best cars and trucks in the whole world." I should Read More »

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Obama and Motown….

President Obama apperared today in my hometown, the city of wheels, Detroit, MI. Although in the grand and beautiful state of Michigan for the Labor Day weekend, I did not venture into the Motor City to hear the President speak, instead choosing to stay in a quintessentially Michigan setting near a lake and tune into it on C-Span. What I was treated to via the helfpful public affairs channel was vintage Barack Obama at his Read More »

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AT&T and T-Mobile: Troubled Reasoning Despite Good Policy

While I applaud the decision of the Department of Justice to file suit to block the merger of AT&T and T-Mobile as a sound free-market and pro-competive decision, recent quotes from Administration officials leave us to believe that this positive and constructive move may be more of a case of a blind squirell finding a nut than any sort of visionary and sound policy posture. Moreover, in reading the reviews of this action, I Read More »

Entrepreneurship: In Decline or Under Attack

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As I continue to publish more opinion pieces on the economy, one of my primary theses is that the underlying weakness in the American economy is directly related to a declining ability to compete on a global level.

As any student of Michael Porter, the Harvard Professor and author of a series of exceptional books on competion including On Competition and Competitive Advantage of Nations, or of famed economist David Ricardo knows, a person/nation/organization needs to emphasize its competitive advantages in order to compete.  That can often be a cost differentiated advantage or it can be a product/resource/skill set advantage.  While I believe that there are numerous causes for the current decline in American competitiveness globally – disregard for the reserve stature of our currency, excessive national debt, disingenous immigration policies, wayward micromanagement of the economy at the federal level, hostility toward business in general from political leadership, excessive regulation of economic activities by fiat – one of the most compelling reasons for the current situation is the decline in entrepreneurial activity in the United States.  The reason for this assertion is simply that entrepreneurial capitalism is the primary differentiator, or, to use Riccardian terminology, competitive advantage of the United States economy.

To  be certain, not all of these causes of our current level of national competitiveness and economic malaise are independent of one another.  But, as any casual observer of the economy knows, small business creates most new jobs in the economy.  In fact, it is a rather small subset of those businesses, start-ups, that create the vast majority of such jobs, particularly high value ones, as a recent study by the Kauffman Foundation points out.

Book Review: The March of Folly

March of Folly, Tuchman

I am aware that the subject for my first book review on the site, Barbara Tuchman’s, The March of Folly: From Troy to Vietnam, may result in derision.  After all, the book was first published in 1984 and seemed particularly timely in light of the end of the Vietnam conflict occurring roughly ten years earlier, but why review a book published in 1984 now?

There are really two answers to that.  The first is the decline of Borders Books and their subsequent closing and going out of business sales which encouraged me to pick up on some books I have long wanted to own.  The second, very simply, is that Tuchman’s scintillating and entertaining analysis of the persistent folly of Government’s throughout history is particularly relevant today.

I became an enormous fan of Ms. Tuchman after reading The Guns of August, an account of August 1914 leading up to the commencement of World War I, many years ago.  Her decidedly anti-ideological perspective of history and her balanced approach that downplayed persistent views of an era being calamitous and inevitable was, to me, the proper perspective on events.  The Guns of August, of course, won the Pulitzer Prize for history, as did her phenomenal Stillwell and the American Experience in China.  The March of Folly was one of her last two works, the other being The First Salute which was her overview of the American Revolution.  It is, for me, a quintessential work of an intellectual that, having reflected on a lifetime of research and writing, had arrived at a moment of serendipitous enlightenment of the culmination of her work on its ultimate meaning.  In Tuchman’s case, that enlightenment is that Government’s, despite short periods of admirable performance, are doomed to folly.

In fact, the opening of The March of Folly is as follows:

“A phenomenon noticeable throughout history regardless of its place or period is the pursuit by governments of policies contrary to their own interests.  Mankind, it seems, makes a poorer performance of government than of almost any other human activity.”

Detroit Continues to Retrench

closed detroit library

That Detroit is a troubled city surprised no one that is aware of news in the United States.

Having proudly hailed from that gritty an resilient locale, which locals now refer to as “the 313”, I am both fascinated by the city’s plight as a microcosm of failed public policy and saddened that such a symbol of American economic pre-eminence is in such a state.  Consequently, I attempt to stay abreast of Motor City events.

Ron Paul Flexes Fund Raising Muscle

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Apparently, the launch of a cyber-attack against their campaign website did not prevent the Ron Paul campaign from raising over $1.0 million over the weekend.  Info-Wars has a nice piece on both the attack and the success in raising such a large amount in micro-donations in face of such an attack.

Representative Paul seems to be in a political netherland out of which his campaign is successfully managing an exit.  The main point, according to many in the mainstream media is that Mr. Paul is unelectable.  Erik Ericson, in a piece for redstate.com – The Goldwater Talking Point–  calls this the Goldwater effect and alludes to the history of failure of both campaign tactics and mainstream media prognosticators when attempting to use it.

Video: Ron Paul Ames Straw Poll Debate Highlights

Below is a video of the highlights from Ron Paul’s performance at the Ames Straw Poll Debate

Vital Medicine in Short Supply

A recent New York Times article illustrates the difficulty of regulating the economics of any industry, in this case the pharmaceutical companies.

The article, entitiled U.S. Scrambling to Ease Shortage of Vital Medicine, which does a fairly good job of describing the problem but dances around the root causes. The circus that is becoming our pharmaceutical market would be entertaining if it were not so vital.  For example, the author, Gardiner Harris, writes:

“A crucial problem is disconnection between the free market and required government regulation. Prices for many older medicines are low until the drugs are in short supply; then prices soar. But these higher prices do little to encourage more supply, because it can be difficult and expensive to overcome the technical and regulatory hurdles. And if supplies return to normal, prices plunge.”

In other words, supply cannot adjust because of the slow pace of Government Regulators.

Fed’s Richard Fisher Thinks US Needs Regulatory Certainty

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Speaking at a community forum in Midland, Texas, Richard Fisher, President of the Federal Reserve Bank in Dallas, asserted that the US Economy has sufficient liquidity to grow but insufficient fiscal and regulatory policy certainty.

“Pointing fingers at the Fed only diminishes credibility,” he said. “The ugly truth is that the problem lies not with monetary policy but in the need to construct a modern, appropriate set of fiscal and regulatory levers and pulleys to better incentivize the private sector to channel money into productive use in expanding our economy and enriching our people.”

Rueters has a complete story here.

It is our intent to provide comments and opinions on the regulatory climate as we complete the final configuration of our site.

 

Obama Challenges Tax Cutting as Job Creation Strategy

Speaking today in Iowa President Obama has apparently been challenging the premise that tax cuts lead to job creation.

A relatively new blog that I follow, Truth Iowa, recently did a nice piece on that very issue that contained a good review of some of the academic research that is available.  Not surprisingly, when one considers the relatively anemic results of the President’s economic policies, the post, without passing judgement, seems to definitively point to the opposite conclusion – namely that tax cuts are likely the strongest tactic to use in order to create jobs.  The post is entitled The Great Fiscal Debate – Tax Changes and the Economy.  Between the original post and the subsequent comments, there is a wealth of information in this very informative post.

I have quite a bit of research to add to this debate as well, but am still trying to add a base of content and format the site so I will keep it in abeyance for now.  In the meantime, the Truth Iowa piece comes pretty close to the additional information that I can provide.  So, enjoy it in the meantime.

 

Illustration of the Spending Explosion

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The graph pictured above in this post shows that spending for non-defense items in the federal budget has exploded over the past two years – remarkably so.

After averaging approximately 15.6% for the past several decades, it now accounts for over 20% of GDP.

You may see a full sized version by clicking here or on the image below…

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